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The real root of women's inequality in retirement

Research has revealed that Scotland has the second-worst gender pensions gap in the UK. A report by Prudential has found that women in Scotland can expect to receive more than one-third less than men when they retire, with an average annual income of £10,029 compared with £17,539 for their male counterparts.

The media has largely focused on the fact that the gender pensions gap has narrowed, although this is because men’s income has fallen as opposed to an increase in the amount women are saving.   

Vince Smith-Hughes, Prudential’s retirement income expert, has advised ‘practical steps that women can take to improve their retirement income’ which includes maintaining pensions contributions during career breaks and making voluntary National Insurance contributions after returning to work.

However, such ‘practical steps’ are simply not an option for many women and do not address the real root of women’s inequality in retirement. Women are less likely to be in work and have access to an occupational pension scheme and when they are in work, they experience lower rates of pay and so are less able to contribute a pension. Research by Scottish Widows found that 71 per cent of women (compared with 60 per cent of men) cannot afford to save long-term while 23 per cent of women (compared with 17 per cent of men) are saving nothing for their retirement.

Women earn less over their lifetimes, have less savings, and less of a pension compared with men of equivalent age. As primary carers, many women have taken career breaks that have resulted in vast holes in their pension pots.   

At a time when women’s incomes are being squeezed by not only the UK Government’s extensive public sector spending cuts but also the rising costs of childcare, food and energy bills, it is not surprising that many women are unable to save for their retirement.     

Research reveals the majority of women can't afford to save for retirement 

Government U-turn on women's pension age but millions still to lose out 

Government pushes ahead with plans to raise state pension age for women

Research reveals the majority of women can't afford to save for retirement

Research has revealed that the number of women saving enough for their retirement has reached a seven year high. The Scottish Widows Women and Pensions Report 2011 has found that 50% of women are now saving adequately for their retirement, up from 43% in 2010. It’s not all good news though as the research also shows that more women are saving nothing at all towards their retirement, 23% compared with 17% of men. Furthermore, 71% of women say they can't afford to save long term compared to 60% of men.

The report found that when women do save, they tend to save a higher percentage of their income than men. However, the gender pay gap means that women’s earnings are lower which in turn means that the average monetary amount saved by a woman is significantly less than that of a man.

There are now more than a million women unemployed in the UK, the highest level since 1992. At the same time, there are fewer jobs, notably in the public sector, which is currently translating national spending cuts into local budget reductions.  Public sector employers are more likely than the private sector to offer flexible working opportunities which enable women to combine work with caring responsibilities. Consequently, more women may be forced into looking for part-time work which is typically low-paid and low-skill.

Further attacks on women’s incomes come in the form of rising childcare costs, a cut in childcare subsidies, and fewer childcare places. In Scotland, the average annual cost for 25 hours of nursery care per week for a child under two is £5,178. The cost of a childminder for a child aged two and over in Scotland increased by 8.3 per cent almost four times as much as the average wage.

Given the impact that such changes have on women's incomes, it’s little wonder then that the majority of women can't afford to save long term.

High cost of childcare forces women back in the home

Government pushes ahead with plans to raise state pension age for women

Government U-turn on women’s pension age but millions still to lose out

The UK coalition government has announced that it is to delay the planned increase in state pension age to 66 until October 2020.

The government had planned to accelerate the raising of the state pension age for women from 60 to 65 in 2018, two years earlier than previously planned. The changes announced yesterday mean that the maximum amount of women will have is now 18 months instead of two years.  Although the move will benefit 245,000 women, 2.3 million women across the UK will still lose out as they struggle to make alternative plans for their retirement on very little notice.   

Many of the women affected, who are currently in their late 50s, are already seriously disadvantaged when it comes to pensions, especially those who work part-time. Most of the women will have earned less over their lifetime, have less savings, and less of a pension than men of the equivalent age. Many of the women will also have had interrupted careers due to taking time out to care for children, which means they will have vast holes in their pension pots. Many will also not have had access to company pension schemes. 

Government pushes ahead with plans to raise state pension age for women

The UK coalition government has won a vote in the House of Commons to take forward plans to raise the state pension age for women. 500,000 women will now have to wait 18 months to two years longer than they expected before they can collect their state pension, costing them up to £15,000 each.

The equalisation of the state pension between men and women will now be accelerated with women’s retirement age rising from 60 to 65 in 2018, two years earlier than previous plans. The retirement age will then rise to 66 for both men and women in 2020.

Many of the women affected, who are currently in their mid to late 50s, are already seriously disadvantaged when it comes to pensions, especially those who work part-time. Most of the women will have earned less over their lifetime, have less savings, and less of a pension than men of the equivalent age. Many of the women will also have had interrupted careers due to taking time out to care for children, which means they will have vast holes in their pension pots. Many will also not have had access to company pension schemes.  On top of this, these women have now been given very little notice to make alternative plans for their retirement.

More than 170 MPs have now signed a Commons motion calling for a rethink over the plans, including both Conservative and Liberal Democrat backbenchers.

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